Labour’s £3bn contract crackdown will hit pubs, care homes and youth jobs, bosses warn

LABOUR’S crackdown on zero-hours contracts could cost business up to £3 billion, a damning government assessment reveals. The party came to power with a pledge to ban “exploitative” zero-hours contracts as part of a new workers’ rights package. Angela Rayner spearheaded the workers’ rights changes Credit: Reuters Shadow Business Secretary Andrew Griffith says young people will pay the price Credit: PA But top bosses last night slammed the rising cost of taking on workers and said it will do further damage to the youth inactivity crisis. The workers’ rights package has been spearheaded by former deputy PM and now Communities Secretary Angela Rayner. Sign up for the Politics newsletter Thank you! The impact is set to be most concentrated in industries where demand is more variable including hospitality, the arts along with health and social care, government documents show. Andrew Griffith, Shadow Business Secretary, said: “Labour’s jobs tax and employment red tape have been so damaging already, but this goes further and once again, it will be young people who will pay the price, during a growing crisis of young Brits out of work.” Firms have had to deal with hikes to national insurance hikes and minimum wage increases adding to the burden on business since Labour came to power. Kate Shoesmith, from the British Chamber of Commerce, said: “The increased cost to businesses of the proposed changes to zero hours contracts will be a further hammer blow for many firms struggling to keep their heads above water. “The government had previously claimed that the cost of the entire Employment Rights Act for business would be £1bn but this research clearly blows that out of the water. “Businesses have seen their costs due to government policy increase by 70 per cent in the last decade, and their ability to absorb more is extremely limited. Most read in Politics “We are already facing a youth unemployment crisis – now is not the time to make it even more costly for employers to hire. Kate Nicholls, Chair of UKHospitality, said: “The eyewatering cost of these reforms comes at the worst possible time for hospitality businesses, arriving on the heels of more than £5 billion in additional employment costs in the past two years. “More than 100,000 jobs have already been lost in hospitality as a result and the extraordinarily high cost of employment continues to restrict job opportunities, particularly for young people.” Workers on zero-hours and low-hours contracts will get the right to guaranteed working hours from next year if they want them. The government is consulting on whether to apply the policy to anyone working 48 hours a week, but its preference is for the threshold to be between eight and 20 hours. Firms will also have to fork out if shifts have been cancelled or moved at short notice in a huge financial blow. In a worst-case scenario, the right to guaranteed hours could cost firms £450 million. Then the right to reasonable notice of shifts could cost £1.2 billion and the then £1.3 billion for the right to payments for shifts cancelled or moved. In a best-case scenario, the overall direct cost to business could be £350 million. No final decisions on what is deemed an exploitative zero hours contract or what reasonable notice should be given. The consultation runs until next week. The planned reforms will still “support growth” by improving conditions for workers, an impact assessment said. A government spokesperson last night said: “We are absolutely committed to ending exploitative zero hours contracts, where workers bear all the financial risk when hours, shifts and earnings are unpredictable. “These reforms will give workers in every postcode greater income security and predictability of hours and while no final decisions have been made, we’re consulting to get the detail right and ensure this works in the real world.” 1 comment1